Canada: What to put in non-registered/taxable account

[Darren]

Hey,

I know there have been a few forum posts about this topic, but I couldn't find them. Apologies.

I'm looking a summary of what investments to put/not put in a non-registered account (as opposed to TFSA, RRSP). I'm Canadian, so looking for details on US-registered/traded ETFs vs CAD-reg ETFs, corp/govt bonds, etc.

If someone could provide a quick summary, or links to other forum posts, that would be splendid!

Thanks team,

[Lews Therin]

http://therichmoose.com/guides/investment-account/

If you have more questions let me know!

[Darren]

Just what I'm looking for. Thanks a lot!

[Darren]

Read through RichMoose. Lots of great info.

I have a couple further questions about which products to put in non-reg.

Seems to be agreement that HBB (swap-based bond) is good to hold in non-reg. Would you want to move your bond asset allocation out of TFSA/RRSP and in to non-reg, or just keep your asset allocation as it is. Mine is about 85/15.

Next, RM and others recommend adding Canadian equities to non-reg such as VCN, ZCN, HXT (swap).

What about a global market ETF such as XAW? It is registered in Canada, trades on the TSX, but does not track Canadian stock indexes. Would the tax disadvantage of non-Canadian stocks come into play here?

What about something like VGRO or VEQT in a non-reg account? Any major cons?

Thanks for your help.

[Lews Therin]

Taxes mostly. It's the tax-favoribility of the canadian dividends that make it slightly better for VCN in open.

I'd have bonds in RRSP.

Apart from that it depends on your salary. Low salary: Dividend in open all the way; High: swap (To avoid paying even more taxes)

Xaw and VCN work together, it's just separated so that the optimally taxed part (VCN) can be placed at the right location.

The tax disadvantage is really low FYI, it's just that why not do it right the first time.

I personally have a mix of dividend stocks (bought during the COVID crash, so I have canadian banks paying out 6-7% dividends in my TFSA and LIRA), XAW in RRSP, VCN and HXT & Xaw in margin.

Whats your salary range / province?

[Darren]

Taxes mostly. It's the tax-favoribility of the canadian dividends that make it slightly better for VCN in open.

I'd have bonds in RRSP.

Apart from that it depends on your salary. Low salary: Dividend in open all the way; High: swap (To avoid paying even more taxes)

Xaw and VCN work together, it's just separated so that the optimally taxed part (VCN) can be placed at the right location.

The tax disadvantage is really low FYI, it's just that why not do it right the first time.

I personally have a mix of dividend stocks (bought during the COVID crash, so I have canadian banks paying out 6-7% dividends in my TFSA and LIRA), XAW in RRSP, VCN and HXT & Xaw in margin.

Whats your salary range / province?

Thanks for this. Salary is about 90k and I'm in Ontario. I'm 33 and, knock on wood, would expect my salary to increase over time.
My other account holdings are as follows, with AA of about 85/15.
TFSA: VXC, ZHY, ZEF
LIRA (small, about 8k): VXC, ZPS, VCN
RRSP: XAW, VCN, ZCS
Company RSP with 3% match: 100% equities. A third each of Can, US, and Int'l mutual funds.

[Lews Therin]

So 90k, Ontario, I'd go all in Swap-based ETFs. (for open accounts)

The rest seems fine. I'm sure you could gain some money by optimizing a bit, but really, we're talking small amounts.

I'd move all my Bonds to my RRSP, and fill TFSA with stock only. (Not saying fill the RRSP with bonds, but put the 15% bonds for your total portfolio in the RRSP, and have the stocks everywhere else.)

[G-String]

I've been investing part of my non-registered funds into TD e-series Nasdaq index funds because Nasdaq funds don't pay out any dividends, so all I'd do is pay capital gains tax if/when I sell.  Similar concept as the Horizon swap based funds.